As per IBIS World projections, GDP is anticipated to increase 5.1% in 2021, as vaccines emerge and ramp-up, allowing businesses to reopen. This will bring people back to work and see the unemployment rate decrease 17.5% in 2021. This means some industries will see growth opportunities and could represent a great investment opportunity.
One of the potential recovery targets is the hospitality industry. Revenue in the hotels and motels industry is forecast to rise by 32.3% in 2021. This will lead to employment in the industry increasing by 21.5% in the same year. This will be driven by an increase in inbound international travel into Canada, which is expected to increase by 340.8% in 2021. This will provide industry operators with a solid revenue base as the recovery of the travel industry is directly related to the hospitality and accommodation market. This means opportunities to buy hospitality-related assets that may be distressed now, banking on this future recovery.
Also, the “buy local” mindset is gaining popularity and could present a growth opportunity for those operating local Canadian businesses that can market themselves as local options for goods and services versus importing from other countries. This creates opportunities for local stores and manufacturing businesses.
Another opportunity is based on the fact that investment in technology, remote work and online sales will continue to be important trends for the progression and growth of Canadian SMEs in 2021. Statics show that almost 40% of Canadian small and medium-sized companies expect to invest in technology in 2021. This creates the opportunity for everything from furniture companies providing work at home office furniture, technology companies selling and supporting technologies to work from home, and companies like website developers, shipping and logistics firms and marketing companies that are directly related to online shopping.
The real estate market offers a unique story. Most researchers believe that the real estate market will continue to increase, with prices projected to rise around 5%. The real estate market is a unique dichotomy, divided into residential and commercial with each depending on several factors (mortgage rate, market inventory, location, etc). So, opportunities to invest in real estate, or in businesses that do construction and renovation will need careful consideration to ensure you make the right decision on where to invest.
Based on the current state of the economy and the recovery there are multiple opportunities when looking at an investment such as:
- Low purchase price: a lot of businesses have suffered and because of the debt load, etc may not be able to recover. This can be an opportunity for new owners to acquire them at a distressed price and ride the recovery wave to higher performance.
- Available funding: banks have been very tight in 2020 to fund businesses. To achieve their lending quota, banks will likely be open to more generous lending as the recovery starts to ramp up.
- Real estate: construction and acquisition of residential and commercial projects outside Toronto is growing as people continue to move towards working from home.
- Government Assistance: in order to support economic recovery, governments are offering record levels of financial assistance. Starting or acquiring a business will be able to benefit from this support
All of this creates opportunities for entrepreneurs and businesses of all sizes to begin to capitalize and start planning for a rapid recovery.
For more details on opportunities and how we can help you, please contact BPF Solutions for an initial consultation at 1.877.800.2731, 1.416.222.2909 or info@bpfsolutions.com.
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